AMRI has continued its investigation into the mechanisms that generate anatomical and functional contrast in MRI scans. In susceptibility-weighted MRI, a technique for anatomical MRI that provides unique contrast and high spatial resolution at high magnetic field, the major contributors to contrast between healthy brain tissues have been revealed and quantitified. However, quantification of these contributions remains difficult and remaining uncertainties are 1) what is the distribution of susceptibility compounds on the cellular level;and 2) what is the molecular mechanism that creates exchange-induced NMR frequency shifts. In the 2010-2011 review year, AMRI has made some progress towards addressing the cellular mechanism underlying susceptibility contrast. Specifically, by studying marmoset brain at diiference orientations relative to the magnetic field it was found that magnetic susceptibility effects are the major contributor to T2* relaxation at high field (7Tesla), that this contribution is orientation dependent, and that pure dipolar effects that underlie T2 relaxation contribute to a lesser extent. These relaxation effects are attributed to myelin. In addition, it was found that this susceptibility effect is also reflected in the T2* decay curve and cause multi-component relaxation behavior. These findings suggest the possibility of studying the brains myelin content through T2* relaxation, which is potentially important for demyelinating diseases such as MS. In addition, it was found that in MS, strong susceptibility effects that occur in the periphery of some MS lesions are caused by elecated iron in macrophages and microglia. In functional MRI, contrast mechanisms were further investigated by performing physiological and neuronal challenges. It was found that respiratory challenges cause a spatially dependent blood-oxygen-level change accross the brain observable from both the amplitude and timing of the response. The regional dependence in the timing suggest that the underlying vascular dilation is caused by a vasoactive agent that resides in the arterial vasculature and originates from regions significantly upstream from the cerbral cortex. In addition, it was found that substantial downstream effects occur in the venous vasculature due to passive vasodilation.